Investors with a long-term horizong may find it valuable to assess Korab Resources Limited’s (ASX:KOR) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how Korab Resources is currently performing. See our latest analysis for Korab Resources
How Well Did KOR Perform?
For the most up-to-date info, I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This allows me to assess different companies on a similar basis, using the most relevant data points. For Korab Resources, its latest twelve-month earnings is -A$0.6M, which, relative to the previous year’s level, has become less negative. Given that these values are somewhat short-term thinking, I have estimated an annualized five-year figure for Korab Resources’s net income, which stands at -A$1.6M. This means even though net income is negative, it has become less negative over the years.
We can further analyze Korab Resources’s loss by looking at what has been happening in the industry as well as within the company. Firstly, I want to quickly look into the line items. Revenue growth over the last couple of years has more than doubled, signalling that Korab Resources is in a high-growth period with expenses shooting ahead of elevated top-line growth rates, leading to yearly losses. Scanning growth from a sector-level, the Australian metals and mining industry has been growing, albeit, at a subdued single-digit rate of 7.36% in the prior twelve months, and 8.50% over the previous five years. This suggests that, although Korab Resources is currently running a loss, it may have been aided by industry tailwinds, moving earnings towards to right direction.
What does this mean?
Korab Resources’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always difficult to predict what will occur going forward, and when. The most insightful step is to assess company-specific issues Korab Resources may be facing and whether management guidance has consistently been met in the past. You should continue to research Korab Resources to get a better picture of the stock by looking at:
1. Financial Health: Is KOR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.